Commitments of Traders
The speculative net positions in AUD futures are/have been at an extreme levels for few weeks.The last time we saw 70K net short was in March 2015. AUDUSD rallied 600 pips. The conditions seem perfect for the price to reverse from here to the upside, at least for few hundreds pips.
This week, speculators covered 8K short positions and left their longs unchanged.They were 92K net short, which is down from being 100K net short in the previous week and from being 115K net short week before that. The EXTREME reading of 115K net short and 67% share of Open Interest three weeks ago marked a technical top in USDJPY. These metrics were never wrong to call a major top or bottom before but many times the price lagged. The current price action is erratic and not in downtrend yet. We will need to break 111.50 for bear market to really take off.
After speculators held their positions unchanged in the previous week, they added fresh 2K longs and covered 8K shorts this week. The same pattern continues. Smart money is slowly getting out of short Pound futures but still reluctant to add longs. This week they were 50K net short, which was down from 60K in the previous week. Open interest was flat. My bias is to the downside in the short term but I expect long term bottom to form around the current level ( 1.27 low )
Speculators were clearly bearish for a 2nd consecutive week. This time they covered 2.4K of long positions and added fresh 6.6K shorts. They were 16K net short, up from being 7K in the previous week and 3.6K net LONG two weeks ago. The bearish sentiment is clearly present among smart money traders. Given the divergence in price, rallies should be sold.
Speculators added 8.8K new long positions and at the same time they added whooping 38K new shorts. They were 114K net short, which is lowest in 2018. The last time speculators were this much net short, the price moved from 113 to 104 in few short months. This could be the same case again, given the price action has been very strong and it is trading near a major resistance. We could have a major top forming at 114 once again.
Speculators were bullish for another week. This time they covered 10K of their short positions and added 2K long positions. They have been dropping their shorts for 5 consecutive weeks now. In total they covered 38K shorts. While the Brexit still looms and the price action points to the downside, speculators are clearly more bullish in GBP futures. Lets see if they call the bottom again.
Speculators abandoned 22K of their long positions and added only 1.7K shorts to their portfolios this week. They were whooping 68K net short, which qualifies for an extreme level. The last time speculators were this bearish it was back in Nov 2015 when the price moved from the double bottom at 0.70 to almost 0.80. There were few other instances of such a reversal at similar levels ( see in the chart below ) Share of open interest also jumped to 58%. I would like to see this metric coming above 60% but it is surely looking like a long term reversal in this market
This week, speculators were bullish on GBP once again. They added fresh 1.9K long positions while, at the same time they covered 6.5K of their shorts. This is a very clear bullish bias present for a 2nd consecutive week in this market. Open Interest also spiked by 18K contracts on higher prices during the week. These are all very bullish signals and suggest, the long term bottom in Cable might be forming.
The speculators covered a significant amount of short positions this week. This is the second consecutive week with them dumping shorts. Two week ago they covered 15K and this week another 13K. This accounts for 16% of their all short being liquidated in only two weeks time. They become net long after being net short for the last three weeks. Their net positions stood at 8K net long. The price action is bearish unless we clear the resistance at 1.1740. If speculators dump more shorts and start buying EUR, we might be getting larger rally but for the moment the price action must be assumed bearish.
The speculators took a significant profits last week in EUR futures. They covered 17.5K longs and 15K shorts. They were 7.2K net short, most since they became net short few weeks ago. The open interest was down first time in many weeks. The declining open interest on rising prices is a sign of a top. The recent rejection of the 1.1740 resistance can be defined as a short term top. More downside is likely in the coming weeks.
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